Pipe Dreams – The False Promise of Local Pipeline Jobs

NJ Falling Further Behind on the Jobs Front –

Missing Strategic Manufacturing Opportunities 

No Vision, No Leadership On Energy & Economic Development

Like almost everything else in the US and world economy, NJ was once a pioneer in pipe manufacturing.

Not any more.

Like so many industries NJ pioneered, shortsighted corporate profit driven decisions and failure to innovate and invest led to decline and obsolescence (and export of US jobs to third world countries where corporations could exploit labor and the environment with impunity, a well documented process that began over 40 years ago, known as “deindustrialization“, which would later become known as “global trade” and “financialization”.

That process has created what Chris Hedges calls “sacrifice zones”. Neoclassical economists, in contrast, call this the “creative destruction” of capitalism. Marxists economists describe the process as revealing the contradictions of capitalism. Economic historian Karl Polanyi lays out the dynamic and framework in his classic 1944 book as The Great Transformation).

A symbol of this failure, the closed US Pipe plant on the Delaware dates to 1866 –  those mothballed industrial sites are now producing more tourism revenue than manufacturing revenue, see:

• U.S. Pipe Closing New Jersey Plant – (historical plant overview)
• Griffin Pipe

The decline is not limited to 19th century heavy industrial manufacturing technologies –

A recent NJ Department of Labor report titled:  New Jersey’s Advanced Manufacturing Cluster Winter 2014 – 2015  focuses on so called “advanced manufacturing”. The report paints a shockingly dismal picture:

New Jersey’s manufacturing sector averaged marginal growth of 0.3 percent per year from 1997 through 2008, but tumbled to decline by an annual average of 5.1 percent from 2008 through 2013    

Look at that chart – at that NJ jobs gray line dropping like a stone – it is astonishing!

Repeat: under Gov. Christie, NJ’s “advanced manufacturing” sector “tumbled to decline by an annual average of 5.1 percent from 2008 through 2013″. 

Last month, Senate President Sweeney seemed to show an inkling of strategic understanding of this set of challenges.

During a Senate Environment Committee hearing, Sweeney emphasized that he had done his homework and strongly supported off shore wind development based on the number of manufacturing jobs it could produce in NJ.

Sweeney began the discussion of a pro-wind bill, S-2711 after 4 years of inaction by the Christie Administration. Sweeney had some strong words (verbatim remarks by Sweeney):

In March 2011, BPU was supposed to publish the wind regulations. The  fact that the BPU has not published regulations is a clear statement from the Administration that they’re opposed to wind energy, at the cost of the economy of the state of NJ.

We would have captured 1,000 manufacturing jobs in this industry. We were so far ahead of other states, up and down the east coast.

Gov. Christie’s failure to follow through on off shore wind development cost NJ over 1,000 good manufacturing jobs.

The Gov.’s diversion of $1 billion of Clean Energy Funds has cost thousands more good paying contractor and trade union jobs.

So, given those failures in wind, clean energy, and advanced manufacturing, what is Sweeney focusing his political energies and investing his political capital on?

A handful of temporary construction jobs installing another natural gas pipeline, though the Pinelands, no less.

Senate President Sweeney recently defended his role – in what the Asbury Park Press editorial Board called ” a new low in sleaziness” – in support of the South Jersey Gas Co. pipeline through the Pinelands, see:

Sweeney defends role in Pinelands Commission flap

NEPTUNE – Senate President Stephen Sweeney and Gov. Chris Christie have had some famous disagreements, but not over Christie’s pick for a seat on the Pinelands Commission.

Sweeney, D-Gloucester, says he has no apologies for actions he took that led to the Senate Judiciary Committee approving Ocean City resident Robert Barr in an 8-4-1 vote Tuesday. […]

“I am in favor of the pipeline, I absolutely am. I’m not backing away from that,’’ Sweeney said. “I’m not against the Pinelands. I want to save the jobs.’’ […]

Sweeney said the Pinelands will be fine if developer South Jersey Gas wins final approval because the company’s application is laden with beefed-up environmental standards.

“I had South Jersey Gas jump through hurdles, and for one reason: They’re going to make a lot of money selling gas,’’ Sweeney said.

So, Senator Sweeney,  it’s jobs, eh?

Or is it the corporate profits?

Or is it really all about the “hurdles” SJG jumped through (a euphemisms for campaign contribution shakedowns? Kickbacks?)?

• False Promise On Jobs

First, let’s take a look at the jobs claims.

A recent Report by the Chair of the Department of City and Regional Planning Department at Cornell (the program I attended) about the job creation associated with fracking is instructive for looking at the economic geography of the pipeline industry as well, see: The false promise of fracking and local jobs

But opening the door to fracking doesn’t lead to the across-the-board economic boon most people assume. We need to consider where oil and gas industry jobs are created and who benefits from the considerable investments that make shale development possible. A look at the job numbers gives us a much better idea of what kind of economic boost comes with fracking, how its economic benefits are distributed and why both can be easily misunderstood.

The Cornell Report concludes that: 1) far fewer jobs are created than claimed by industry and their paid cheerleaders; 2) there is little impact on the in-state unemployment rate; and 3) there are small in-state economic benefits.

Ironically, literally adding insult to injury, the Report concludes that the majority of the few good jobs that are created by fracking primarily benefit Texas not the Marcellus shale states where the drilling is occurring that suffer all the public health and environmental impacts and public health risks & harms:

This [data] tells us that the production sites aren’t necessarily the places that get the economic boost. The most skilled workers on drilling crews are from Texas and Oklahoma and they return home to spend their earnings. 

So, how many NJ based jobs would the SJG Pinelands pipeline create and how are this jobs and economic benefits distributed?

What jobs and economic benefits does NJ receive? Are they commensurate with the costs? Who wins, who loses?

Pipeline supporter Senator Van Drew (D-Cape May) estimates that the pipeline would create just 75 temporary construction jobs and retaining 60 jobs at BL England plant (Cape May Herald).

A recent Rutgers University econometric Report suggests somewhat larger job creation.

(And don’t think I didn’t notice how Rutgers is touting job creation associated with fossil infrastructure, while Cornell is critiquing and demolishing fossil energy industry jobs and economic claims – could that be related to energy industry contributions to Rutgers? – Good questions for another day!)

The pipeline would cost about $100 million and the BL England plant re-powering about $400 million. So this is a $500 million investment that would be paid for by NJ residents and businesses.

What benefits would NJ get for that significant investment?

No new manufacturing jobs would be created in this $500 million pipeline and power plant project.

That is virtually no return on a massive investment that NJ ratepayers will finance.

In terms of retaining existing jobs, that is an incredibly tiny jobs to investment ratio: a cost of some $8.3 million per job retained!

And just like fracking, the good manufacturing jobs are located in Texas and Louisiana –

According to US Economic Census data, Texas is #1 in pipe manufacturing jobs and Louisiana #2, with over 10,000 jobs. 

Meanwhile, NJ pipe manufacturing jobs are hardly visible – just 250 – 499 jobs at 18 NJ plants, with just 4 of this plants employing more than 20 workers.

According to the NY Times, the steel manufacturing jobs from all the fracking and pipeline expansions are  few, and they are located in Ohio steel mills. Few new additional jobs are projected due to heavy automation:

In Canton, Timken executives said they expected to complete the Faircrest mill’s additions by 2014, and production will increase to 925,000 tons annually from 750,000 tons this year. Mr. Miraglia said 425 people worked at the plant and that automation in the new buildings most likely meant that few if any jobs would be added.

So, what does all this tell us?

1) There is virtually no real strategic economic development or energy planning going on in NJ State Government.

Instead, there are Pipe Dreams and “new lows in sleaziness”.

2) What little economic development policy there is is reactionary and limited to costly and ineffective corporate subsidies that reflect no larger strategic vision.

Energy policy is driven by existing fossil fuel dominated producers and distributors and the narrow and blinkered policies of ratepayer concerns.

3) We are missing huge opportunities to develop good manufacturing and construction jobs in energy efficiency and renewable nervy industries.

4) In addition to fatal failure to focus on jobs and economic development using long standing traditional methodologies and policy tools, the climate change imperative and existing economic tools like the social costs of carbon are completely ignored.

5) Therefore, it seems apparent to me that the supporters of alternative energy also are missing opportunities to make effective economic development arguments and to critique the aforementioned flaws.